King’s IPO Debuted Below Expectations

King, the company that developed the hit game “Candy Crush Saga” began their trading yesterday. King’s shares on the New York Stock Exchange were originally priced at $22.50 per share.

Originally, King expected the price to be between $21 and $24. However, the offering price opened at $20.50 per share and dropped to $19.07. Within two hours, it rebounded and was down only 10% from the initial public offering price, $20.20. Since rebounding, the price has continued to fluctuate.

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The game that makes up for 78% of King’s sales, Candy Crush, brings in about $10 million a week for the company with over 93 million users. If King sold 15.3 million shares at the current price, the company would be worth around $6.5 billion.

The hesitation that many people and investors have about the IPO is how previous companies like King, have performed.  Zynga is the company behind the once popular game “Farmville”. When they released their IPO in 2011, they had a share price of $10 per share, with a peak of $14.69 in 2012. As of now, they fell all the way down to $5.80 per share. Concerns arise when you compare Candy Crush as being another one-hit wonder just the way that “Farmville” was. Zynga has yet to release another game that was as popular and profitable as “Farmville”. Will King have the same trouble?

The gaming market is very volatile, having multiple games reach number one on the charts every other week. There is no way to predict which new game will take off and become the next most downloaded game. When investing into a company, you want to make sure that they will longevity in the market and do not rely on just a single component. For most, this is the fear behind investing in King. We will have to wait to see how the market and investors respond to the IPO and whether or not the price will drop further down their initial offering price.

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